Service offerings below cost price often result in an excess of input VAT. At the end of 2016, the V. Senate of the German Federal Fiscal Court assumed that an emerging asymmetry would indicate that the person performing the supply was not acting as a taxable person (KMLZ-Newsletter 8/2017). In this case, VAT deduction would not be possible. A new judgment of the XI. Senate clarifies that, when checking if a person is acting as a taxable person, all aspects of the individual case must be taken into account in an overall assessment. The decision, regarding the public sector, might also ultimately impact on the private sector.

The Federal Fiscal Court has referred the question of the possible VAT exemption of driving schools to the ECJ (Ref. V R 38/16). Fortunately, the referred questions are comprehensive. If the ECJ affirms a VAT exemption, its scope of application will be expanded. Such a ruling may ultimately result in the supply of educational services, by other commercial schools and self-employed teachers, also being found to be VAT exempt. In order to benefit, to the optimum level from the VAT exemption, affected taxable persons need to react now.

The upcoming introduction of a split payment system by the Romanian tax authorities will enable them to control future payment transactions between taxpayers. It is expected that, as of 1 January 2018, it will be mandatory for customers to transfer invoiced VAT amounts to a special tax account of the supplier. The regulation will also be applicable for taxpayers not established in Romania but registered for VAT purposes there.